91. Prestige, Inc. needs an aggregate plan for its product line. As part of trying to maintain a lean production system, management prefers a constant workforce, no overtime, and constant production level. Relevant data follows: Item Data Units Data Item Data Units Production time 4.5 Item Ending inventory target Shortage Units % of monthly forecast labor hours per unit 0% required Hiring cost $10,000 per person Straight time labor cost $24 per hour $75 per unit Laying off charge $20,000 per person cost Inventory hours per Workday day $10 per unit per month Number of workers 72 people holding cost Overtime labor cost Beginning inventory units $36 per hour The sales forecast for next year is: Month Jan Feb Mar Apr May Forecast 2000 1500 2000 2500 3000 3500 Month Jul Aug Sep Oct Nov Dec Forecast 4000 4500 4000 3000 2500 1500 Jun Other assumptions: Even though the workday is 9 hours per day, workers are paid for 10 hours per day. Worker hires or layoffs take effect on the first day of the plan month. Backorders are carried over month-to-month 20 working days per month part A What is the total cost for this plan? (HINT: use a similar format for your spreadsheet as on S&OP lecture slide 13 "Level Strategy with backorders") part B Instead of enduring the increased shortage costs, management decides not to have backorders. What is the cost of this plan and how does it compare to part A? (HINT: use a similar format for your spreadsheet as on S&OP lecture slide 23 "Level Strategy with no backorders") 91. Prestige, Inc. needs an aggregate plan for its product line. As part of trying to maintain a lean production system, management prefers a constant workforce, no overtime, and constant production level. Relevant data follows: Item Data Units Data Item Data Units Production time 4.5 Item Ending inventory target Shortage Units % of monthly forecast labor hours per unit 0% required Hiring cost $10,000 per person Straight time labor cost $24 per hour $75 per unit Laying off charge $20,000 per person cost Inventory hours per Workday day $10 per unit per month Number of workers 72 people holding cost Overtime labor cost Beginning inventory units $36 per hour The sales forecast for next year is: Month Jan Feb Mar Apr May Forecast 2000 1500 2000 2500 3000 3500 Month Jul Aug Sep Oct Nov Dec Forecast 4000 4500 4000 3000 2500 1500 Jun Other assumptions: Even though the workday is 9 hours per day, workers are paid for 10 hours per day. Worker hires or layoffs take effect on the first day of the plan month. Backorders are carried over month-to-month 20 working days per month part A What is the total cost for this plan? (HINT: use a similar format for your spreadsheet as on S&OP lecture slide 13 "Level Strategy with backorders") part B Instead of enduring the increased shortage costs, management decides not to have backorders. What is the cost of this plan and how does it compare to part A? (HINT: use a similar format for your spreadsheet as on S&OP lecture slide 23 "Level Strategy with no backorders")
